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Posted by Michelle Lee, Deputy General Counsel and Head of Patents and Patent Strategy

This afternoon the U.S. Supreme Court considered oral arguments in Bilski v. Kappos, a potential landmark case in intellectual property law that will determine what kinds of business methods and software processes deserve patent protection.

The case has to do with two businessmen who sued the Patent and Trademark Office after it denied them a patent on a method for hedging risks in energy commodities trading. In a 9-3 decision, the U.S. Court of Appeals for the Federal Circuit ruled against the plaintiffs, holding that abstract ideas and mental processes are not eligible for patent protection. Under the law, a patentable method must either be tied to a particular machine, or transform an article from one state to another.

This case is critical to the future of innovation in the United States. A recent flood of patents on business methods and abstract software processes has contributed to uncertainty and an explosion of expensive lawsuits. The Constitution permits Congress to create patent laws "to promote the progress of science and the useful arts," and we support patent rules that effectively further that goal. But awarding patents on abstract ideas and processes, like the claim at issue in the Bilski case, poses a serious threat to innovation, job creation, and economic growth.

An editorial in Sunday's New York Times hits the nail on the head:

"Patents perform a useful function, promoting innovation by ensuring inventors the right to profit from their creations for a period of time. But overprotection through patents is as dangerous as under protection. It can stifle competition... Not every bright idea should be protected as a property right."

Earlier this year we joined a number of companies in filing an amicus curiae brief, asking the Supreme Court to uphold the lower court's decision and the original intent and language of the law. The revolution in information technology should be built on innovation, not litigation.